Understanding Investment Protections in the UK

When investing in the UK, it's important to understand the protections in place to safeguard your money. Different types of investment accounts come with varying levels of security, regulated by the Financial Conduct Authority (FCA) and supported by the Financial Services Compensation Scheme (FSCS). Here’s a breakdown of how your investments are protected:

1. Financial Services Compensation Scheme (FSCS)

• If the investment platform or financial adviser firm goes bust, you may be protected up to £85,000 per firm.
• If you hold cash in an investment account, it’s usually protected under the FSCS deposit protection scheme (again, up to £85,000 per institution).
• If a fund provider collapses, the investments should be ring-fenced, but if fraud or mismanagement leads to losses, you could be eligible for FSCS compensation (up to £85,000 per provider).
• It's important due diligence is carried out on the investment managers and the financial adviser you have instructed. Checking the FCA register is a good starting point to ensure they hold the correct authorisation. 

2. Financial Conduct Authority (FCA) Regulation

• If the adviser or platform is FCA-regulated, they must follow strict rules to protect investors.
• They must provide suitable advice under the Consumer Duty framework.
• If they recommend something unsuitable, you could seek redress.

3. Financial Ombudsman Service (FOS)

• If you receive bad advice, you can complain to the adviser first.
• If unresolved, you can escalate the complaint to the FOS, which can award compensation (typically up to £415,000 per claim for post-April 2019 cases).

4. Client Money & Asset Rules (CASS)

• Investment Platforms & Advisers must segregate client funds from their own i.e. they cannot hold client money, and their own money, in the same account.
• This protects you if the platform or adviser goes under, as your investments remain ring-fenced. You would just need to find a new platform to transfer the assets to. 

5. Professional Indemnity Insurance (PII)

• Financial advisers are required to have PII to cover client claims in case of negligent advice.
  
  Note: Losses due to market performance are not covered.

Key Takeaways:

• Regulatory Oversight: Platforms operate under FCA regulation, ensuring compliance with UK financial standards.
• Compensation Eligibility: FSCS provides a safety net up to £85,000 if the firm cannot fulfill its financial obligations.
• Asset Protection: Client assets are segregated, safeguarding them from company liabilities.
• Adviser Assurance: Professional Indemnity Insurance offers an additional layer of client protection.